Market Commentary 2nd Quarter 2026
The second quarter of 2026 followed on from an environment already marked by geopolitical uncertainty, but the focus shifted more clearly to the conflict between the US, Israel and Iran/Hezbollah, as well as the blockade of the Strait of Hormuz, a key chokepoint for global energy trade. Repeated ceasefires, renewed threats and intermittent attacks created a volatile environment. It was only towards the end of the quarter that some signs of easing emerged with the memorandum of understanding between the US and Iran, although key issues such as the handling of Iran’s nuclear program and the sustained reopening of the Strait of Hormuz remain unresolved.
In the US, the economy remained broadly resilient, although growth became less broad-based. Annualized GDP growth in the first quarter stood at 2.1%, supported by investment, exports and government spending, while private consumption weakened noticeably. The labor market presented a mixed picture: non-farm payrolls increased by 172’000 jobs in May, while the figures for April and March were revised upwards, and the unemployment rate remained stable at 4.3%. At the same time, declining hiring activity and fewer resignations pointed to a still cautious hiring environment.
In Europe, economic momentum remained weak. Eurozone GDP declined by 0.2% quarter-on-quarter in the first quarter, while employment increased only slightly. Higher energy prices, rising interest rate expectations and subdued consumer demand weighed on economic activity. The picture was different in Switzerland, where GDP rose by 0.4% in the first quarter, following growth of 0.2% in the previous quarter. This positive development was mainly supported by a robust industrial sector and higher government spending. The UK also recorded growth of 0.6% in the first quarter. However, political uncertainty in the country intensified following the resignation of Prime Minister Starmer.
China grew by 1.3% quarter-on-quarter in the first quarter and therefore remained on a solid footing. In particular, Chinese exports continued to show stable growth, rising by almost 20% year-on-year in May. Japan also recorded a robust performance in the first months of the year, with quarterly growth of around 0.5%.
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